Russian steelmaker Evraz saw revenue growth flattered by price increases as steel sales volumes remained static in 2011 at 15.5m tonnes. And, while the shares aren't demandingly rated, there are few near-term catalysts for a rerating.
The modernisation of Russian rail mills should be completed by end-2012 and will allow the supply of better quality rails to Russian Railways – the major domestic customer. In the meantime, a higher proportion of value-added products – shifting from semi-finished to finished products – helped lift cash profits 23 per cent to $2.9bn (£1.8bn), although over half of this came from the mining operations. Evraz wants to develop its iron ore resources base, primarily by expanding the Kachkanar operations, to secure a steady supply of ore to the steelmaking division. Efforts to de-bottleneck operations helped the mining division sell 18 per cent more products to the steel division and to external customers in the year compared with 2010.
Coking (steelmaking) coal production has been affected by difficult geology, mine shutdowns and more stringent health and safety requirements – so raw coking coal production fell from 10m tonnes in 2009 to 6.3m tonnes in 2011.
Prior to these results, JP Morgan Cazenove was forecasting 2012 EPS of 60¢.
| EVRAZ (EVR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 362p | MARKET VALUE: | £4.85bn | |
| TOUCH: | 361-362p | 12-MONTH HIGH: | 465p | LOW: 303p |
| DIVIDEND YIELD: | 2.9% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 415¢* | NET DEBT: | 111% | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2009 | 9.77 | -338 | -24.0 | nil |
| 2010 | 13.4 | 633 | 39.0 | nil |
| 2011 | 16.4 | 873 | 36.0 | 17.0 |
| % change | +22 | +38 | -8 | - |
Ex-div: 6 Jun Payment: 9 Jul *Includes intangible assets of $3.02bn, or 226¢ a share £1=$1.60 | ||||
